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Women’s Stunted Capital Blocks Better EconomyLock Icon

7 min read

Arkansas is missing out on tax revenue, jobs, wealth building, new products and services that could improve lives, business diversity and community investment, all because women struggle to access business capital.

Barriers women entrepreneurs and business owners face here and nationwide include stereotypes, programs that don’t accommodate other responsibilities or schedules, and their own doubts, according to one business owner in Bentonville and five women working for Arkansas organizations that support entrepreneurs.

Overcoming these obstacles will require gathering direct feedback from women entrepreneurs on what they need, developing programming that is designed for them and putting women in leadership roles who think differently, who don’t just check boxes, they said.

While women own 34% of the small businesses in Arkansas, their businesses received just 5% to 9% of the total SBA 7(a) loan amounts awarded statewide from 2015-19, according to the Arkansas Small Business Access to Capital Study released on March 1 by the Winthrop Rockefeller Foundation.

“One of the biggest barriers that women entrepreneurs seem to encounter is really, for the lack of better terms, a lack of trust in the financial institution space. I’ve heard countless times of women that have had to get their husbands or dads to also be a part of that business just to be considered legitimate,” Chauncey Pettis, director of Winrock International’s Arkansas Women’s Business Center, said. The AWBC opened in 2010 and is headquartered in El Dorado.

“It’s that ‘women aren’t as good in business’ negative connotation that still persists today,” she said. “It’s really disheartening because studies also show that true financial multipliers are women. We outpace our male counterparts. We’re more likely to use dollars responsibly and multiply them in communities we’re a part of than our male counterparts.”

‘Unlock the Potential’

Anna Beth Gorman, executive director of the Women’s Foundation of Arkansas in Little Rock, said making capital more accessible to women could “unlock the potential of the Arkansas economy” by helping build wealth for families. Without capital, she said, many businesses can’t flourish.

Pettis said this capital access issue can also lead to a lack of business diversity that causes people to leave communities. Communities become stagnant when they reflect only one life perspective: the perspective of men, especially white men, she said.

Martha Londagin, capital access manager for micro-loan program Kiva Northwest Arkansas, which is run by Startup Junkie in Fayetteville, said, “We all need to come on board and see that by empowering half our population to own businesses, generate income, pay taxes, hire employees, we’re lifting the economic tide of our entire country and our state.”

Arkansas has one competitive advantage, the women said.

Gorman said Arkansas organizations like hers don’t struggle as much as similar organizations in other states do to form relationships with for-profit businesses and state government. So there is an opportunity there that can be leveraged to solve the capital access issue.

Pettis believes Arkansas is lagging on addressing this. “But it is such a large national issue that I can’t even comfortably say how far behind we even are,” she said. “One thing we have going for us is that it takes less to start your entrepreneur journey here. We are such a close community within our state that acces-

sibility to people that could help, were they to choose to, is so much greater than a lot of our surrounding states in a lot of our bigger communities nationwide.”

She said most Arkansans are within a phone call or two of government officials.

In talking about capital access, Pettis draws from her personal experience.

She started clothing and stationery company Harlem Lyrics when she was a teen and ran it for 15 years. The company’s products made it onto the shelves of several regional and national chain stores; then Pettis got an offer to put them in 33 Macy’s stores.

She sought purchase order financing for money to make the items the retail giant had preordered.

“That’s as close to a done deal as you can get. I went to three banks before I got financed,” Pettis said. “We were almost a decade old. We had almost a decade worth of tax returns, product sales, and a direct line and proof to where this money would go to make money to pay the bank back. … What the hell else do you need?”

She also said she knew the bankers she approached and that their feedback on the denials was minimal.

April Roy, the founder and CEO of FemPAQ in Bentonville, had a similar experience with her 3-year-old business.

She has raised just $2,500 from winning entrepreneurial competitions. Her company sells a convenient, sustainable emergency kit to help businesses stay prepared for menstruating customers and employees. FemPAQ also advocates for ending the stigma surrounding menstruation and for equal access to feminine hygiene products, Roy said.

“I tried applying for a traditional loan. I was turned down. There wasn’t really an explanation why,” she said.

Roy was seeking $10,000, had a full-time job and was told by a small-business consultant who had worked in banking before that her product would be considered adequate collateral.

Following the denial, Roy started looking into access to capital. The statistics for women, especially Black women like herself, were discouraging. “I realized that seeking outside capital may not happen for us,” she said.

There is a historical reason for the systemic bias women business owners may face, said former banker Londagin.

It’s only been since 1974, with the passage of the Equal Credit Opportunity Act, that a woman hasn’t had to have her husband or a male relative cosign for a loan or credit card. “We have to recognize the history and why it is so new to accept and to see a woman in business,” she said.

Pettis said, “You don’t have to trust anyone off of nothing. Just read that business plan with the same gaze as you would a male’s, and I think we would find by that alone there would be so much more women with access to capital. It’s not goodwill; it’s good business.”

Emma Willis, director of the Heartland Region for Venture Noire, said women business owners — “9 times out of 10” — are also getting an education, holding down a typical job, parenting children and/or caring for relatives. Programs with a 9-5, weekday schedule don’t work for them.

Venture Noire is a nonprofit in Bentonville that aims to help people of color start and grow their businesses.

“Just because we have a robust ecosystem that exists does not mean it is accessible,” Pettis said. “Existing is not the same as accessible. I think the biggest takeaway is for the ecosystem to understand that available is not the same as accessible.”

Willis agreed that entrepreneurial support organizations “don’t always just put it directly in front of entrepreneurs.”

They need to ask themselves if they are accessible to “the woman in her oneness,” Pettis said. “Are you accommodating the moms? Are you accommodating the wives that have homes that they still are trying to cook for and clean and for all the other hats we wear?”

Consider that school drop-offs and pickups can fall outside the typical workday, and that many mothers can’t commit to an accelerator that is longer than a nine-week grading period, she suggests.

Another barrier is that women business owners need to be in the room when decisions are being made about them.

“That’s a very prevalent issue when it comes to gender equality,” Pettis said. “Men have the tendency to decide what the women need, without considering them in their oneness, without considering what barriers they have, without considering biases that you don’t see, guy. Without considering that they’re also moms and wives and several pieces that you can’t account for because you haven’t experienced those disadvantages.”

And then the women who are chosen to be in those rooms are the women who blend in, who don’t push back and contribute to the echo chamber, Pettis said.

“Get the ones that will actually help you solve the problem you claim to want to solve,” she said. “Do you really want to help this issue? Or do you just not want to be accused of the opposite? And it’s really a lot of the latter that’s happening.”

Confidence Is Everything

Women may also be held back by their own doubts. Londagin, with Kiva Northwest Arkansas, said many women business owners start out not seeing themselves as business owners because they have conventional jobs, their business is what they do on the side, and they haven’t seen women in that role before.

Willis, with Venture Noire, said women are more risk averse, too. The Rockefeller study found that women business owners are less likely to seek funding than their male counterparts.

More education on funding options is needed, Willis said. Women also need to be encouraged and to see people who look like them starting businesses to gain the confidence they’ll need, she said.

Pettis said, “Not only is confidence everything, [but] it shouldn’t be. I shouldn’t have to kick the door down with my chest out for you to read the business plan. … Just follow your own processes that you say apply to everyone. Women entrepreneurs aren’t asking for a different set of rules.”

(Correction: A previous version of this article incorrectly reported the percentage of Arkansas businesses that are owned by women because of a typographical error in the source material; 34% of the state’s businesses are women-owned.)

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